CILEx lawyers warn leasehold reform will be ‘undermined’ if it fails to tackle managing agents

Responding to the government’s latest consultation to reform the home buying process which closes this week, CILEx surveyed its conveyancing specialist reference group drawn from its 5,600 members working in conveyancing, out of a total membership of 20,000.

CILEx is calling for systemic changes to the market to rebalance the equality of arms between landlords and leaseholders to fix the ‘broken market’. It says that crucial to the success of leasehold reform will be greater regulation of managing agents, and strengthened redress mechanisms for leaseholders.

In its response, the professional body points to the ‘excessive or unreasonable fees’ being charged by landlords and managing agents in the form of service charges and administration costs. It also highlighted anecdotal evidence from its members regarding shared-ownership leases which points to unreasonable costs being charged for work involved in staircasing – where a tenant gradually acquires more ownership of the property.

Simon Garrod, Director of Policy and Governance at CILEx, says:

“Without further regulation and adequate redress mechanisms in place, the government’s plans to reform the home buying process for consumers will be undermined. In particular, it is essential that there are added protections and greater transparency around administration and service charges for leaseholders.”

Further, CILEx members also believe that managing agents and freeholders should be required by law to respond to requests for leasehold information within 10 working days and that a maximum fee of £100 should apply for doing so.

Almost all CILEx members were in favour of ground rents that begin, and remain at, a peppercorn level, and were therefore fully in support of the government’s proposals for a £10 cap. Yet it warned of the risk of developers seeking to replace lost revenue streams following implementation of any cap.

Members were also in favour of better protection for residential long leases, in the form of an extended original term, with members saying leases should be granted on 999-year terms.

The professional body is also calling for greater clarity around government priorities in relation to leaseholder reform to help legal practitioners and consumers better prepare. Its members cited top priority areas as: raising consumer awareness, protecting vulnerable leaseholders from repossession, and regulation of estate and managing agents.

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